Issue
Once a superannuation contributions surcharge rate is calculated, does that rate apply to all of a member's surchargeable contributions for a financial year in accordance with subsection 7(1) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCTA)?
Decision
Yes. The superannuation contributions surcharge rate applies to all of a member's surchargeable contributions for a financial year in accordance with subsection 7(1) of the SCTA.
Facts
The Commissioner of Taxation (Commissioner) calculated the member's adjusted taxable income (ATI) for the financial year based on the total surchargeable contributions as reported by the member's superannuation provider.
The member's ATI exceeded the surcharge threshold for the relevant financial year. The Commissioner issued a superannuation contributions surcharge assessment to the member in respect of the reported surchargeable contributions.
The member objected against the Commissioner's surcharge calculation on the basis that the rate should not be applied to all of their surchargeable contributions, but instead only to the amount which fell above the surcharge threshold (i.e., the difference between their ATI and the surcharge threshold).
Reasons for Decision
For each financial year in which a member has surchargeable contributions, the Commissioner must calculate the member's ATI for the financial year.
If the member's ATI is greater than the surcharge threshold for the financial year, superannuation contributions surcharge is payable on a member's surchargeable contributions in accordance with subsection 7(1) of the SCTA.
There is no scope for the Commissioner to apply the superannuation contributions surcharge rate only to those surchargeable contributions which fall above the surcharge threshold.